Prop 65: California May Change Up Chain of Commerce Responsibility

Proposition 65, a/k/a the Safe Drinking Water and Toxic Enforcement Act of 1986, has been under fire since the law was first enacted.

Intended to protect Californians from cancer-causing or birth defect-inducing substances, the law mandates anyone dealing in these substances provide warnings to the public. Building owners, retailers, business operators, agricultural producers, employers, distributors, manufacturers, importers, etc. all have a responsibility to label products or post signs on the premises, if there is a possibility someone could be exposed to one of these substances.

One of the main criticisms since Prop 65’s inception, primarily centers on all of the litigation centering on the supposed lack of warnings by defendant businesses.

The California Environmental Protection Agency’s Office of Environmental Health Hazard Assessment (Cal EPA / OEHHA) is now proposing to clarify the responsibility. Who exactly should provide warning labels on products?

The proposal focuses on the “Chain of Commerce.” According to the Proposed Rule,

. . . amendments to the regulations would further clarify the regulatory provision implementing the statutory direction to place the primary obligation for providing a Proposition 65 warning on the product manufacturer, thus minimizing the impact of the warning requirements on the retail seller.

The OEHHA outlines chain of commerce responsibility in the proposal as such:

1. The manufacturer would provide the warnings to an intermediate business, for example, a distributor or importer.
2. The intermediate business would provide written notice of the warning materials to either an authorized agent of a business, or to an authorized agent of a retailer. The intermediate business would be required to obtain written or electronic verification of receipt.
3. The retailer would then be responsible for placement and maintenance of the Prop 65 warnings received, and provide notice to consumers in California.

Currently, retailers must provide consumer warnings if they have “actual knowledge” of potential exposure to toxic substances. The OEHHA proposes clarifying this as well. The proposal states:

1. The basis for “actual knowledge” of the retail seller must be of “sufficient specificity for the retail seller to readily identify the product that require [sic] a warning”.
2. The proposed modification would provide that “actual knowledge” requires specific knowledge of the consumer product exposure be received either by an “authorized agent” for the organization, or an employee in a position of sufficient responsibility that his or her knowledge can be imputed or attributed to the retail seller.

Business owners and the general public may comment on the Proposed Rule before 5 p.m. on December 31, 2018. Instructions for submitting input are available on the OEHHA website.

Stephen T. Holzer is a business litigator and the Chair of our Environmental Practice Group. 

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